Sen. Warren Slams CFPB’s Plan To Revisit Enforcement Actions

The Federal Reserve reported Monday (Dec. 18) that it would repeal Regulation C, a regulation pertaining to home mortgage disclosures, and is proposing to limit the reach of Regulation M, pertaining to consumer leasing.

According to U.S. Central Bank data reported by Reuters, the Fed will repeal Regulation C because the rules have been superseded by those set forth by the Consumer Financial Protect Bureau (CFPB). Regulation C requires all depository institution to disclose the communities in which they provide residential mortgages each year.

Meanwhile, the Fed is also proposing the limiting of Regulation M’s reach, thanks to a rule put on the books by the CFPB in the past. The Fed wants to keep the part of the leasing rules that have to do with motor vehicle dealers intact, however.

The Fed’s comments come as its new head, Jerome Powell, President Donald Trump’s selection for Federal Reserve chairman, said at his confirmation hearing that he supports rolling back some bank regulations, but will protect the central bank’s political independence. According to the Associated Press, Powell also strongly hinted the Fed would raise rates again in December.

Powell believes the Dodd-Frank Act, passed after the 2008 financial crisis, has succeeded in making the financial system stronger. He also believes that in some areas, such as regulation of smaller banks, the law has imposed unnecessary burdens that should be eased. While many GOP senators were happy to hear Powell’s remarks, Democratic senators pressed him to say whether he would cut key consumer protections in the 2010 law.

Powell claims to be “strongly committed” to the political independence of the Federal Reserve. In addition, he explained that the Fed would continue on a gradual path of raising interest rates and shrinking its massive $4.5 trillion balance sheet, adding he expects that debt to shrink to around $2.5 trillion to $3 trillion over the next three to four years. That program was set in motion by Powell’s predecessor, Janet Yellen.

Separately, U.S. Sen. Elizabeth Warren said in a series of letters that newly installed CFPB head Mick Mulvaney has been seeking to install political allies in various roles at the CFPB.

Reuters reported that Warren wrote to Mulvaney and also the Office of Personnel Management that bringing in those appointees would be both inappropriate and possibly illegal.  If Mulvaney were to bring political appointees in to the agency, such actions would violate civil service laws.

In one letter to Mulvaney she wrote that “your naked effort to politicize the consumer agency runs counter to the agency’s mission to be an independent voice for consumers with the power to stand up to Wall Street banks,” and in a separate letter to the OPM said that that agency should review “unprecedented and unjustified” plans.